An organization’s unique selling proposition is the unique thing that they do to set themselves apart from competition.

When a customer makes a decision to buy one product or service over another, they are responding to a company’s USP. A well-crafted USP means that a business stands out among a sea of competitors. A business that stands out is one that wins despite being in a crowded market.

How to Define Your USP

As a business, defining your USP is a driver of competitive edge. If you are just starting your business, or even if you are a decision maker in an existing business, your unique selling proposition comes from a comprehensive understanding of your market and your customers.

Every business must stay in touch with the needs, desires, and habits of its customers.

If your business isn’t, you had better be sure that its competitors are. Differentiating yourself from competitors means, first of all, understanding the difference between direct and indirect competitors. After those market actors and their unique selling propositions have been identified, you can tailor your USP to differentiate your business.

Do you know how to calculate market share?

Direct and Indirect Competitors

Direct competitors are competitors who directly compete with your business. People don’t buy things. They buy solutions to their needs, and direct competitors are offering the same solutions as you are to the needs of your customers.

For Example:

Two pizza shops in the same neighborhood are direct competitors. They offer the same solution (pizza, convenience, proximity) to customers within the neighborhood.

Indirect competitors are businesses that offer a different solution for the same need.

In our same example neighborhood, a sandwich shop is an indirect competitor to both the pizza shops. The sandwich shop offers a convenient option for hungry customers and is close by in the neighborhood, but does not sell pizza.

When you analyze your business, are you building the best SWOT?

Putting Together Your Unique Selling Proposition

Your USP is driven by your distinctive competencies and the need to differentiate your offerings from those of your competitors. The core competencies of a business are what they excel at. It could be specialized skills, insider knowledge, access to special pricing, or some combination of factors.

A well-defined USP needs to leverage these distinctive competencies, and needs to be communicated to customers so they can understand exactly why your brand, product, or service is the absolute best fit for their needs over others in the marketplace.

We have been discussing a unique selling proposition as a static, singular thing, but it doesn’t have to be. Each product line or service line will have a USP. Different aspects of your organization may have different USPs in relation to different customers.

A unique selling proposition is only be effective when backed up by research and facts.

Attempting to differentiate yourself from competitors so much that your offerings no longer provide solutions to customer needs is a recipe for disaster. Keeping customer needs, demographic data, and buying habits in the forefront of your decision-making helps ensure that differentiation efforts result in the best decision for your business.

After all, the best decision is an informed one.

This business plan template is a critical resource for entrepreneurs.

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